tv Street Signs CNBC February 19, 2013 2:00pm-3:00pm EST
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>> stocks on the rise again, dow up 7% for the year and the money keeps rolling in. by the way, google keeps rocking. you know what else is higher though? gas. are americans becoming numb to higher prices. the great cnbc tesla test. we literally ran into phil lebeau on the road. herbalife saga continues. >> the market at fresh five-year highs. we have members of the old time high today, dow transports, russell 2000, s&p consumer staples and health care sector. etf seeing $38 billion of in a&e flow so far this year with 92% of that going into stock funds. that number is typically around 70%, might explain why the dow is pushing closer and closer to
its all-time high. let's get to bob pisani at the nyse. i'd like to know whether we've got a situation where stocks are stuck in a positive feedback loop here. >> that's exactly what we've been talking about. feedback means stocks go up, not because there's fundamental news right now, just because people believe that the u.s. stock market is the best place to put money right now. that's a positive feedback loop that's helping. you want to see a positive? this is the market, the bottom of november. this is total stock market. vanguard's total stock market. u.s., all of it. this is the total bond market. you're up 13% since november. total bond markets down 2 or 3%. that's a positive feed back loop. that will break someday. that's not going to continue forever. for the moment nothing is changing it. what would. homeowners index surprising. if you look at the numbers, traffic was lighter than anticipated. it was supposed to be home. we saw home building stocks like
len ar, they are looking a little topy. look at lennar, they have been looking a little topy. that's what i mean. the market doesn't seem to be worried. it wasn't worried last week. i thought walmart, the leak from walmart saying higher taxes were hurting walmart. it hurt walmart, certainly, look at that but hasn't stopped overall market. that's the key point right now. nothing seems to be slowing the juggernaut down yet, not yet, not even negative news. >> what, me worry? thanks, bob. we're following a big and developing story on apple. the company has been attacked by hackers, john ford has been on top of the story. john, give us the latest. >> reporter: this is something to worry about. the same hackers that hit facebook managed to infect apple's computers their employees own. apple says it's able to isolate infected computers from its corporate network and able to
keep that from spreading. there's no evidence hackers got any data out of the computers they infected. a weakness in java, cross-programming language on the web just by visiting the infected website, in this case a developer website, uses could pick up this malware without realizing it. dwa they are releasing a malware removal tool. if think of it as an antidote if your machine has been infected. these hackers target a certain kind of company here. they wanted people visiting a developer web. they got facebook. they got apple. we know they probably infected some other companies but everybody hasn't necessarily stepped forward and said our systems were affected by this, mandy. serious issue. corporate espionage. >> hacking is the buzz worth of the day. thank you very much jon fortt. >> a fun time on "street signs."
the race to 1,000. which stocks hits first. google pulling away. what's more impressive google has 330 million stairs outstanding while price line has 49 million. google's run all the more impressive. >> i guess the question here is if google can go higher. let's bring in mark, and hudson square research and a friend of the company, friend of the station, product strategist at redesign mobile. to all of you, thank you for joining us. mark, let me get to you on guru. you say $830 a share, here we come. why? >> i don't think current valuation trading 15 times next year's earnings, secondly a mobile thesis believe internet usage undermine economics. we're starting to see that mobile bear, traffic acquisition costs stabilize. if that continues a positive for
the stock. third, a strong youtube asset. fourth google is a good play off international recovery, european emerging markets recovery. dpoog wins off that. we think the stock goes higher. >> dan, what's your concern around google. do you have any? >> we do. google has been a great beneficiary along with apple. i think mobile growth for google is behind it. two years ago they used to grow in the high teens, grew in the 40s, last quarter down 24%, down from the last quarter. what you're seeing desktops slowing, had desk stop decline overall. google doesn't give a lot. facebook reported in their k they did see a decline in overall activity in desk stops. i think that same number hitting google, we just don't see it because they don't give as much disclosure. the thing about looking at apple versus google, i think both companies are seeing the slowdown. the slowdown was more dramatic
for apple. google used to grow in the high 20s. this year they grew 11% earnings. apple grew 60%, 11, 15%, dra mask slow down but slowing. google 17 times earnings and apple at 9 times earnings. they are both slowing but i think there's a lot more opportunity for upside in valuation spread. i think what we've seen in performance separation, i think we'll see that come in. either apple comes up or google comes down, i don't think this sustains. >> incredible when you look at the chart. a moment ago we had a three-month chart. rocky over the last months google has been up 20%, apple down 20%. an almost perfect symmetrical divergence is google's gain apple's pain or is this absolutely oversimplifying it and it's just a crazy coincidence. >> i think there is coincidence there. there is some relationship between the two stocks. obviously anything good happens
in android has a potential to take away from iphone. apple really needs to make a decision do they want to be a niche player with high margins or really own the mobile market. for the last four years they have been able to do both. they can't have that any longer. >> you know, mark, google took a stick to aol, then google took a stick to yahoo!. is there anybody out there who you see might be the black swan, if you will, to google in do they have any real threat? >> absolutely, facebook, somebody already mentioned them. there's a billion plus users spending a lot more time on facebook, that takes away from some of the growth runway for google. then amazon. remember, people go to google to search. one of the things they centennial for is commercial products and the extent to which people look at amazon, that's a commercial certainly engine, too. we think that's more than accurately reflected in google's valuation but two fundamental risks. >> the flip side of that, what
if larry wright and zuckerberg get into a room and decide to let google search index facebook, however unlikely, what would that google stock purchase google shares go up 5%, 10% on that. 5% one-day pop on that in a market. that clearly would be positive. commercial implications for google may not be that significant. people pay or advertisers pay for commercial leads off google. you put in a lot of personal posts via facebook. there's probably much less commercial intent in there. still, as a stock catalyst, it's a positive. >> i'm glad mark mentioned amazon. i understand you expect google to get into the fulfill men space which would be taking amazon head on, wouldn't it? >> absolutely. i think google has an opportunity to get into fulfillment where a lot of retailers are threatened by amazon. they are less likely to want to use fulfillment by amazon, especially larger retailers. that's an opportunity for google to capture traffic and get
further into the ecommercial flow. >> dan, do you expect to see google retail stores? do we expect to see google look a lot more like apple or apple look a lot more like google five years from now. >> the other interesting thing about google, how much of the revenue comes from one product, which is surge and how much they are investing in other things. they have fiber deployment, cable deployment in kansas city. the developed android. >> sorry to jump in. that's a great point. that bothered me about google. they are good at making money one way and spending money in 100 ways. >> you said it in a much more eloquent sound bite than i'm able to come up. absolutely. that's the big issue. tarting to say they really created android to protect, a defensive move, not a growth move, to protect their role in search. same thing for buying motorola, protecting. none the economics of the core business which is search.
a great business having more mobile products out there helped them. that would happen anyhow. it's really fascinating to me where google is able to spend, how much credit they and amazon get for that. we don't return, actually see earnings growth. >> thank you very much to all three of you. >> isn't it amazing how google is part of it, google. >> it's a verb. >> the new xerox. >> actually said i googled it. >> on deck, explosive report on how hackers are infiltrating america's biggest countries. >> plus gas spiking again. are americans finally numb to the ups and downs. >> an all electric car could be the solution to higher gas prices if they work as promised. guess what. our own phil lebis f out for himself. cnbc test-drive in connecticut
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of gas prices against -- are you looking steve liesman. gas prices in blue, consumer confidence in green over the last year. have you noticed anything? well, they don't really track. gas prices maybe not impacting spending the way we thought they did. or not. we'll find out. are we getting used to $4 a gallon gas. steve liesman here to break it down. steve, certainly not saying gas prices don't matter. they do. but have we become used to these fluctuations and thus more adaptable and better handling? >> i think that may be part of it that gasoline and oil are volatile components. what you have to do is adjust, somehow, some way. i want to look at a couple of quick things here. first, look at some of the metrics economists use to figure out what a spike in the price of oil means. $10 a barrel, rule of thumb,
minus .2% gdp, double on spending, minus 2 on investment. morgan stanley put that together with woes, political concern and rising fuel prices maybe weighing on the consumer. it's hard to seek growth above 2% over the next couple of quarters. on the other hand, take a look at this next chart. what this next chart shoes you are two things -- i guess that's not the one. another one that goes along with what you're saying. over time going back to 1975. the effect, how much oil to raise a unit of gdp. it's come down, down, down, down. this goes along with your concept, we may be on the one hand used to volatility. on the other hand it matters less. we're able to grow gdp with less. >> earlier notion of tipping point changed. >> that's for sure. what we used to hear was $3, then $4. now it seems if we're going to
use our producer's tipping point for this show, andrea, it's $5. she says it's $5. by the way, she's joined by good thinking, which is some economists think now it's five bucks. >> she's also very smart. and four bucks ain't what it used to be. four bucks in 2007, 2008 dollars is about $3.75 now. we forget about that. oh, a hershey bar used to be a quarter. it's not anymore. it's called inflation. we live with it. >> another chart to show you. energy bill is not only gasoline. you have gasoline, diesel. then you have things like natural gas and electricity. that's the year over year price change in the energy commodities versus energy services. the services are the electricity and natural gas. those have been negative. it's the smaller part of the energy bill but there is an offset. >> it all evens out. >> it doesn't all even out. it is on the upswing. in general there's an offset
there. i'm paying less for gasoline, more for gasoline, less for natural gas. those two combined, 9 or 10% of the total consumer bill, consumer spending. it's not that big a deal in total but in our brains it's a huge amount. >> therefore pay more for gasoline. >> bring in chris faulkner, president and ceo of bright link oil and gas. you heard our conversation, is four the new three. >> four is the new three and five is the new four. gas at $4.11 and the whole world ended. reported folks going to ride the bike to work, not going to drive my car, we're not that far but numbers seem staggeringly different. >> you read things like refinery outages, hurricane sandy, et cetera, et cetera. wouldn't it be temporary. this gasoline spike, therefore,
is also temporary? >> i don't think we're going to see $4 this time around. i think definitely when you look going into april trading up to $0.14. it's going to continue to rise in march and april. refineries shut down, switching from winter to summer blend stocks. opec cut a million barrels a day production in response to saying there's more oil production around the world thanks to the united states and what's happening here. >> crude prices stuck below 100. crude prices if anything have been slightly back sliding while gasoline has been going up. >> that's true. what we're seeing right now is tight supply because we are taking winter supply and milking that to the end, the refineries are, they can't sell it much longer, switch over to summer blend stock. what we don't talk about a lot is we have 15 boutique blends of gasoline. if we do not have to have special for northeast, l.a., southern california, et cetera, et cetera, just a winter and
summer blend, if the epa would back off some regional restrictions that would help impact gasoline prices. >> you mentioned something, chris, that underscores the importance of the nation watching "street signs." >> yes. >> and the reason that's true is because it really matters for consumer spending the extent to which people are listening to chris and understanding that there's a temporary increase in prices or permanent increase in prices. it's a dramatic difference how the consumer responds. do they settle in for the long winter of gas prices or see it as a short storm that comes through. >> easy calculation. the average american uses 50 gallons a month, double that if you have two people driving. if our smart viewers want to know what the impact is. take that number 12,000 a year divided by the car mpg and add a quarter. >> no, that's where it's a little weird, brian. if i think it's temporary i
might dip into savings to make up the spending. if i believe it's permanent i'm not going to reduce my savings rate but reduce my discretionary spending. >> i think that's exactly what's happening. i don't think gas is going down to $2 or $3, maybe average $2.50, as supply shifts occur. i think as folks realize 160 million americans have less money because of the payroll tax holiday expiration that just occurred. budget cuts coming up that could impact that again. i see head winds for consumer sentiment. that in turn reduces the amount of spending consumers willing to push back on the economy. i think it's going to be rough waters for the next near term. i would not hold my breath for $2 gasoline. >> understood. thank you. incredible stat, almost 4% was spent on gasoline. all right. electric cars. maybe they could be the answer to higher gas prices if they can live up to expectation and we
can get good range out of the battery. the week after the tesla test controversy in "the new york times" our own phil lebeau gets behind the wheel of tesla model s. driving d.c. to boston, pulled beside him on the turnpike, i gave him the one lap to go because i was jealous of his assignment. i am waving. i didn't text and drive. i was in a taxi. i almost drove into phil. the car looks great. you look good, too. >> thank you. so you know my photographer bob pollack saw somebody waving from a car, delivery car and goes who is the crazy man. we got up and said, hey, what's going on. you did look crazy. >> thank you. >> show you while we're here in milford, connecticut, tesla super charger charging station. why are we here? this is one of two on the east coast between d.c. and boston. what we wanted to see as we went
from washington, d.c. early this morning on "squawk box" as we head up to boston for the closing bell is how does the tesla model s perform as we were going along in our drive. we've gone about 300 miles so far. a couple of things stand out. first of all, i've had a number of people who sent me e-mails or texted me or they have tweeted me saying do you have range anxiety when you're driving the model s. i have not had range anxiety primarily because i've known how far i can go. the car kept me posted the entire time. we had 45 miles worth of battery power when we got to this destination here. we knew exactly where we were. having said that. if you were to get lost or some reason you were not close to a charging station you might have range anxiety. the second thing to keep in mind, this super charger network is free for owners. a lot of people say is it free? what are they charging people to charge up model ss.
it is free if you're a tesla owner. they have these on the east coast, six in california, san francisco and tahoe, l.a. and vegas. guys, the whole idea of what tesla wants to do under the ceo is build out this network nationwide. obviously starting in california because that's where the early adapters are. but we're on our way to boston, weather permitting. >> i have a question for you. i ask this question only half ingest, phil. before the joe ryan and i were chitchatting. for that price, you would want the car to give awe back rub as you drive along. it needs to have more than saving on gasoline and looking hot and saying i drive a tesla. at that price you would want all the bells and whistles and a back rub, right? >> right. >> that's true, in terms of creature comforts you're not hurting at all. the center console stack, looks basically like a giant ipad.
you want in for tainment. everything is there. the fit and finish is what you expect from a car that costs 72 four, which is what this model s costs. it's not as though you're driving a tin can with an electric motor. not at all. this is an upscale electric vehicle. >> that answers my question. thank you very much phil lebeau. safe travels. hope you get to boston in one piece. >> caught my eye. i see this thing. i think, that's a tesla. there's phil lebeau. >> what are the chance of that. i think you had tesla envy. >> i was jealous. >> on his coattails. >> on a serious note, chinese army, get this, accused of stealing secrets from over 100 american companies. we'll have full details on an explosive new report after this. [ male announcer ] you are a business pro.
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"you can do it, phil" hashtag. >> that's catchy, you can do it, phil. >> go phil. >> meantime hack attack continues. jeep reporting its account compromised. jane digging into this. what have you found, jane? >> i'm not sure they reported it but we discovered it. it has happened again after burger king was hacked and replaced with a mcdonald's, jeep attacked and replaced with cadillac. carmakers claim it sold to cadillac, operation mad cow, operation whopper. not sure if it's the same hackers, not clear what the companies have in common. hackers as they did with burger king put up content suggesting inappropriate use of drugs, racial epithets, inappropriate language. twitter tells us it doesn't
comment on individual accounts. julia boorstin says it works on brands, individual practices. this appears to be a web problem, not a twitter problem. cadillac says on its twitter account that it has nothing to do with this latest incident. >> i say do away with everything, twitter, facebook, electronic devices, pcs, go back to the olden days. thank you very much, jane wells. that will solve it. >> might solve this. the cyber security story took another bizarre turn when a new report by an internet security firm came out and traced thousands of cyber attacks to a single building in shanghai as well as to the chinese government itself. senior correspondent scott cohn. >> there's hacking and this is scare y, 75 page report which first and in the "new york times," striking in its detail. comes from security firm mandia
saying it's certain it comes from the chinese government. >> china has a controlled access. everything they do on the internet is monitored there. we have seen thousands of attacks in the last two years alone. it's hard to believe or strains cred credulity, hard to believe it's to the unit 61398. >> this is what they are talking about, a secret unit of the military, a 12-story building in shanghai built in 2007 and wired by telecom. hundreds if not thousands of people work here. they are having what the report claims devastating impact, stealing hundreds of terabytes from companies, a lot u.s.-based. pricing as well as e-mails and contact lests. once they have penetrated a network they stick around, about a year on average. in one instance nearly five
years. the chinese government, as you might expect, is denouncing the report as groundless and noting china itself is a major victim of cyber attacks. statements to the affect chinese military takes part are unprofessional and not new orleans with the facts in a statement by the chinese foreign ministry. the u.s. is raising concerns about cyber security at the highest levels in china. >> but it's very difficult to make this a diplomatic issue between the two countries, if china just flatly denies it, right? >> depends, the evidence u.s. government has developed independently. it's a national security issue, diplomatic issue, a lot of issues here. a lot of what they are taking here, according to this report, is intellectual property, secrets the chinese can then use to do what they do. >> i don't think anybody would be surprised by that. by the way the weekend, ft weekend financial magazine,
tragic story of 24-year-old american in singapore, links to the chinese government, espionage, a sad read for the family but interesting read with the stuff you're talking about now. >> tensions are rising. >> thank you very much. up next, the burger and taxes edition of street talk and the one stat that is making our resident, ozzie holler for a dollar. that wasn't a good australian accent. >> how do you holler. >> you better redneckognize it and get on with it. [ male announcer ] i've seen incredible things.
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>> yes, it is humana and all about rates. they are not the only ones to complain about this. the government's proposed 2014 payment for medicare advantage programs were lower than expected. in other words they go for compensation, government pays them back. now less than they thought. the market doesn't like it. big names that are down. these groups are trying to drag the dow down and s&p. they can't. not right now but they are trying. >> okay. express scripts is moving higher nonetheless. >> stock rising the most in six months. listen, these aren't very volatile stocks. up about 2%, 70% jump in income, claims doubled over the past year. profit forecast for the year that exceeds analyst estimates, although as you pointed out earlier analysts lowered their estimates. the hurdle is not quite as high. >> makes it easier to beat. >> sad state of affairs basically americans are needing so many drugs anyway. >> that was my peanut gallery
moment. take a look what's happening with red robin gourmet burgers. we promised burgers and look at that jump. >> they call that good old-fashioned soaring. better than expected quarterly results. did very well during the holiday season, of course. who doesn't want to buy a burger. now forecasting same-store sales of 3.5%, higher than thought. we had the ceo on the show four or five months ago, trying fancy smancy burgers. average ticket price going up. clearly something i was going to say clucking but i'll say clicking at red robin. >> red robbins don't cluck. >> they rock. >> they rock. h and r block moving down, more to how it's performed. >> there is news, a needed disclosure, my mother works for h & r block doing taxes. no insider information. we know there's delays in
getting paid back. the government is slow because of changes in tax laws, slow to let you file, slow to get refund. talked about potential effect on gdp. my guess, just a guess, a lot of people come in for advanced refunds and maybe things progressing slower than we thought. >> possibly. incredible movement of the stock up over 30% year-to-date. >> one year, 53%, a big poof. >> a very big move. let's look what's happening with herbalife or herbalife as herb would correct me if he was here. herbalife is moving higher. >> herb life is exciting but herbalife reporting after the bell, one of the most successful hedge fund managers out there has sold part of his long-term position in herbalife, came out and defended, defended herbalife defenders, sold some of his stake, still stock continues to
rise, down 30 over the year. i'm going to make a guess that saga is nowhere near being over. >> i hope it's not over because it makes for absolutely fantastic viewing. okay. let's take a look at what's happening in terms of the report that herbalife is going to come out with after the bell today. what should we expect to hear from the company. let's bring in senior research analyst d.a. davidson. you've got a buy rating on herbalife. i would really like to know what is there, if anything, they could say in their earnings report today that would make you change your buy to something a little more negative? >> well, mandy, it's hard to imagine what they would say. the only reason you would not have a buy rating on herbalife is if you believe it was an illegal pyramid scheme. i doubt that's on the agenda for the afternoon. i think they will make efforts to further clarify their model
and provide further disclosure, which is probably the most important thing you can say. >> you don't think they will try to address that at all, tim? >> i don't think that they are going to adjust their model. i think they may adjust some terminology in their model. just like last week or maybe 10 days ago, they presented some new compensation system data that allowed you to really understand what was happening with the 88% of herbalife distributors who don't make any effort to become a business. one of the big lies of the ackman presentation was he traded all these people as failed businesses and most of them are -- >> to be blunt, is there any reason to own a stock where really smart people are arking about the viability of the company's business model? >> well, i think so. i'm a smart person, too. i followed it for a long time. i think we have pretty strong
reasons for recommending it. you know, this stock is hugely undervalued. mr. i iicahn's moves. >> price of $78 bucks, putting his money where his mouth is. >> still ahead on streetsatistreetsatio sayings, i go to flo, come back and even worse than usual. i was not drinking on the plane. >> really? >> really. a little. no, a joke. >> and you took a a taxi. >> read that. >> all-time highs, consumer staples on s&p 500 that is at an all-time high today. stick around.
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success and how technology continues to change that huge industry. also, what's the worst investment call so far this year? cnbc's jeff cox knows. he'll tell us what it is and why almost everybody has gotten it wrong so far. instant analysis, earnings from dell. here comes herbalife. you know bill ackman and carl icahn will be anxiously awaiting those herbalife numbers, so will we. anxiously awaiting the last hour. >> the australian dollar bouncing back. when i hear that song, a little tear comes to my eye. the question is whether or not it is going to last or what traders call a dead cat bounce. that's what kathy says, she joins us live. remember when australian dollar?
>> that's a possible scenario in the australian dollar. if you take a step back and look at what central banks are doing right now. you'll find reserve bank of australia is looking to be a lot more aggressive than many of its piers. theres s weakness in the bank. they had nothing good to say about the economy. i think in march they could cut interest rates. the dollars not trading like the market answer patz it. i do think there's a possibility to see further losses. nothing more than dead cat bounces in the aussie today. >> australian central bank has been cutting rates a while but really makes hardly a dent in australian dollar. even if it cuts rates it's way higher than any other developed central bank i can think of in the world. >> that's a fantastic point. that's the reason i don't think we'll dip below parity in the
dollar. when they were cutting interest rates previously other central banks were easing alongside them. that provided support, other banks with deeper pockets doing more. federal reserve, for example, is pretty much on hold right now. a lot of other central banks feeling the same way. i think the rba stands out in the path in terms of their amounts of aggressiveness this year. >> where would you buy, 101 or wait to go below that? >> i'm looking at 1.0150 as good levels to come into the aussie dollar. i've got a trip to australia in a few weeks, certainly hoping it goes down to that level. >> me, too. i get paid in u.s. dollars so it's painful. >> you get paid? >> no, i do this for free out of the kindness of my heart because i love this job so much. i love comcast, cnbc, i was lying. thank you, kathy. enjoy your time on austria, lucky girl.
i'm actually doing it friday, 5:30 p.m. eastern right here on cnbc. >> before you go to the tease, just a quick note. you can do it phil is getting a little traction on twitter. >> you can do it, phil. >> with the tesla test-drive. still ahead, retail newsa palooza coming your way. >> also later on, the drip drop. why your cup of joe just got a whole lot cheaper. music to my ear. ♪
i'm diana olick with your real estate recovery watch. going local today to minneapolis. home sales were up 11% in january from a year ago. prices even high, up 14%, as the pickings are slim. inventories down 32%. that's minneapolis. to find out how your local market is moving, go to our interactive recovery map at
reali reali reallycheck.cnbc.com. >> coming up, talks of an office depot/office max merger and all kinds of other retail things thrown into the mix. joining us is worldwide enterprise ceo and cnbc contributor and sw retail adviser. boast you, thank you so much for joining us today. >> hi, mandy. >> stacy, when i said all kinds of other things thrown into the mix, one thing that's speculated on is google, a store, bricks and mortar, coming to a mall near you. is this even possible? what kinds of products would they sell? >> well, it's possible. the question is while most retailers are actually wanting to get out of the brick and mortar business, is this the right time for google to get into the business and sell hardway? so the question is, sure, they can sell phones down the road. they are talking about google, virtual glasses, a driverless car, but certainly i would say that the best strategy probably is to take it slow. try it with a pop-up store because the hardware business is
a tough one to be in. >> this is a rumor out there for a while. what do you think, a pop-up store or something that maybe justifies something more? >> i think they have to go into the business of brick and mortar. i think amazon has to. >> amazon has to? >> they need showrooms. >> why? >> why? >> isn't that the point of them being amazon? >> the whole showrooming thing? >> no, because now it's just retailing. not online retailing. it's retailing. you can be the showroom or create the showroom, and you need online, and you need to grow the online business on the back of what you can do in your showrooms, so amazon needs showrooms. macy's needs showrooms. best buy needs showrooms. everybody needs a place to show the goods and a way to sell and deliver them to you. stacy, do you agree with that >> i don't totally agree with that, jan, sorry. i think that in some sense if you want to show the power of the brand and you want to
demonstrate the product. having a showroom, a couple showrooms, a pop-up showroom, fine, but to roll out a retail concept, you know, when clearly this -- the hardware, the margins are coming down which is why best buy is price matching, i don't think it's the right plan. >> talking of best buy, and maybe this should have happened last year, brian, when it was your cnbc stocks draft pick but best buy, a guim of upgrades here. is this warranted, do you think, jan? >> i've liked best buy for a little while ever since hubert jolie got in charge of running things. he's got ideas, ideas that can make them more efficient, and i think there's still a chance they could be bought out. either way you could like owning the stock. you know, they are pretty beaten up. >> stacy, do you think best buy's biggest problem is not best by itself, although they do have problems, but it's not a must-have a item, right? everybody has a big-screen tv, an apple product or some sort of
a gaming console. do they need the big wow, the ye yay? >> they do. it's not only some self-inflicted pain online with best buy, but it is the fact that we don't have the next tv upgrade that's driving the consumer in there, so basically their shift is going to a lower margin product, and, yes, this price matching now that they are doing it permanently may draw in some volume, but scariest thing you want to hear in retail is that we're going to sacrifice and throw under the bus our gross margins to drive volume. that story never ends well. >> we have to leave it there. i would really like to know what the yay product that we all have to have next is. jan, stacy, thank you very much for joining us. >> thanks. >> maybe tweet us in. coming up next, wake up and smell the profits. ♪
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